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BMW warns profits will fall, plans $13.6 billion in cost-cutting

FRANKFURT, Germany — BMW said Wednesday that profits in 2019 will be "well below" last year's, and it will cut 12 billion euros ($13.6 billion) in costs by the end of 2022 to offset spending on new technology. The company said profits would be eroded by higher raw materials prices, the costs of compliance with tougher emissions requirements and unfavorable shifts in currency exchange rates. The Munich-based automaker also faces increased uncertainty due to international trade conflicts that could lead to higher tariffs. "Depending on how conditions develop, our guidance may be subject to additional risks; in particular, the risk of a no-deal Brexit and ongoing developments in international trade policy," said Chief Financial Officer Nicolas Peter. The company forecast a profit margin of 6 to 8 percent for its automotive business, short of the long-term strategic target of 8 to 10 percent, which it said still "remains the ambition" for the company if given "a stable business environment." BMW said it had no plans for layoffs even as it outlined cost saving measures that include dropping half of its engine variants as it seeks to reduce product complexity. The BMW, Mini and Rolls-Royce brands are to get a single sales division. Peter said that given the headwinds to earnings, "we began to introduce countermeasures at an early stage and have taken a number of far-reaching decisions." The company said the measures were needed "to offset the ongoing high level of upfront expenditure required to embrace the mobility of the future." Automakers around the world have faced heavy up-front costs for technology expected to change how people get from one place to another in the next decade. Those include electric cars and renting cars through smartphone apps. Yet the returns from such investments remain uncertain and auto companies face competition from tech firms such as Uber and Waymo. BMW made 7.2 billion euros ($8.2 billion) in net profit last year, down 17 percent from 2017, when it booked a gain of $1 billion from U.S. tax changes. The company faced headwinds from increased tariffs on vehicles exported to China from the United States. It also suffered from turmoil on the German auto market when companies faced bottlenecks getting cars certified for new emissions rules. BMW faces uncertainty from U.S.-China trade tensions that could result in new tariffs if talks do not result in an agreement. U.S.

Mini boss contradicts reports on production Superleggera, says Minor unlikely

Mini has added to our green-beer-induced hangover with some disappointing news. The Mini Superleggera Vision Concept is not quite as confirmed as we had been led to believe. And making matters worse, the same high-ranking source that put the kibosh on confirmation of the stylish two-seater said he "doesn't see" a mini Mini. Mini boss Peter Schwarzenbauer contradicted yesterday's report in an interview with Automotive News, although he certainly doesn't oppose the idea of the Superleggera Vision. "I cannot confirm that it has been approved yet," Schwarzenbauer told AN, adding that it'd be a "great addition to the Mini range" and that he's "still pushing" for it to arrive in dealerships. That's good news for fans of yesterday's report. Schwarzenbauer is less of a fan of a small, entry-level mini Mini, based on the Rocketman Concept. "I don't see a smaller car than the current one," the exec said. It's long been rumored that Mini was readying a smaller, budget model that was more in line with the original Austin and Morris Minis, rather than the premium sub-compact model that BMW has been selling for the past 13 years. The company has even, allegedly, been in cahoots with Toyota to develop the new compact model. We reported as recently as January that the Anglo-Teutonic outfit and its Japanese partners would develop an entirely new platform for the Minor, although that certainly doesn't seem to be the case now. How do you feel about this? Does Mini need to get back to its roots with the affordable, Rocketman-based Minor, or should it keep on doing what it's doing? What about the Superleggera Vision Concept? Should Mini add it as a successor to the short-lived Roadster? Have your say in Comments. Related Video:

Judge to approve settlement of Mini CVT lawsuits

BMW has agreed to settle a number of class-action lawsuits out of court. The suits stem from drivetrain issues on the 2001 to 2006 R50 Mini Cooper - in particular, its continuously variable transmission. The transmission was known to fail, often without warning on otherwise healthy and well-maintained vehicles. This wasn't the only major issue to afflict the original BMW-era Mini models.
According to legal site Topclassactions.com, the suits alleged that BMW knowingly hid the defects in the CVT from customers while informing dealers of the issue. The first suit was filed in 2011, while four additional suits have followed. Now, BMW has reportedly settled, offering to reimburse 1,200 owners that needed repairs within eight years or 150,000 miles of their purchase. Repair prices for the transmission range from $6,000 to $9,000.
Under the agreement, BMW will also offer up to $4,100 to members of the suit that had fixes performed at a third-party shop, while owners who sold their cars at a loss due to the issues are slated to receive up to $2,000. Finally, owners who are part of the suit will be warrantied for a further eight years and 150,000 miles.